Despite rising finance costs, demand for caravan parks in Australia remains robust, maintaining momentum from the lockdown era.
Vanessa Rader, Ray White Group’s head of research, explained significant interest in the sector, with AU$114.06 million in caravan assets changing hands in 2023. This follows a peak investment period in 2022, with over AU$300 million in transactions.
Sales of mixed-use holiday parks have already exceeded AU$100 million. Northern New South Wales emerged as a key area of interest, alongside smaller offerings in Queensland and Western Australia.
Yields for these assets ranged from 6% to 9.5%, influenced by asset quality and land potential. Private investors, family offices, and operators/occupiers were the most active buyer groups.
Caravan parks appeal as an asset class due to their limited start-up and maintenance requirements, which allow returns with minimal resources. According to a report by Elite Agent, Rader noted that the drive holiday market gained popularity during the pandemic due to restricted travel movements.
“Post-pandemic, we continue to see strong occupancy levels with the flexibility and relatively low cost attractive to many travelers,” she said.
Another aspect is the growing ‘grey nomad’ sector. Retirees boost visitor nights. Additionally, remote workers have contributed to increased stays. Couples and families remain the predominant group, attracted by the pet-friendly policies of many parks.
In 2023, total visitor nights declined slightly to 59.84 million from 60.30 million the previous year. However, visitor numbers rose to 15.72 million, with expenditure reaching AU$10.72 billion. This indicates a higher spend per visitor.
New South Wales and Victoria showed positive trends, collectively accounting for half of all paid nights. Occupancy rates in April were 59.8% in New South Wales and 64.9% in Victoria, a decrease from January highs of 73.7% and 71%, respectively.
Tasmania, Western Australia, and South Australia also reported strong occupancy rates, with Tasmania reaching 80%.
Caravan registrations in 2023 is another highlight. Australia registered 765,150 caravans, an increase of 5.3%, alongside a 4.9% rise in campervan registrations.
The data and visitor demographics underscore valuable insights for guiding future developments in the caravan park sector. The sustained demand for caravan parks, despite rising finance costs, emphasize the sector’s resilience and appeal.
Retirees, or the ‘grey nomad’ sector, significantly contribute to visitor nights, alongside remote workers and families. Tailoring amenities and marketing strategies to these demographics can be beneficial for potential growth for caravan park owners and developers.
Additionally, offering flexibility, maintaining cost-effectiveness, and providing pet-friendly policies can enhance attractiveness to diverse visitor groups, ensuring sustained high occupancy and increased revenue.
